Why Give a Damn:
The intention of this post is to tell the story of the beginning and ending of a business. In three subsequent blog posts, we will zoom in on lessons learned in different areas such as the business setup, funding, the market, consumers and technology.
The authors of this post, Ties Kroezen and Lonneke Craemers, managed NICE International, a company focused on the energy and IT sector in Africa.
This business concept was called NICE
(Next Door Internet, communication and Energy).
NICE International was a flagship social enterprise based in The Netherlands that had to wind down its activities in September 2013 because it could not realize its international expansion. In 2011 NICE participated in the Unreasonable Institute. The former management of NICE International decided to share the lessons learned from building up and winding down the company, hoping that other social enterprises can learn from our experience. The lessons learned were presented in a seminar in The Netherlands on December 12 and through a series of posts on this website. In this first column, the history of NICE is presented: how did the company start and grow and why did it finally have to be closed down. Subsequent columns will zoom in on specific aspects of the business, such as funding, technology and serving the Base of the Pyramid market.
How did the company start and grow and why did it have to be closed down?
In 2003 Paul van Son, executive of Dutch utility company Essent, attended a leadership program in The Gambia, a small country in West-Africa. As part of the program he spent a few days in a typical African village without electricity, running water or access to telephone and Internet. He realized how access to such basic infrastructures could accelerate the development of villages like this, of which there are tens of thousands across Africa. With some other executives from the Dutch utility sector he started Energy4All Foundation in order to develop business solutions for access to basic infrastructures in developing countries. The Foundation developed a social business concept linking solar energy to energy-efficient IT and Internet-access. This business concept was called NICE (Next Door Internet, communication and Energy).
The first two NICE Centres opened their doors in early 2007 and were powered with solar energy.
When the idea was fully developed, Ad van Wijk, board member of Energy4All and CEO of renewable energy company Econcern, saw so much potential in the NICE Concept that he offered to provide the funding for a pilot if NICE would become a subsidiary of Econcern. In this way, NICE International was registered in 2006 as a full subsidiary of Econcern. Subsequently a local subsidiary in The Gambia was established and local management was hired to run a pilot with the first two NICE Centres. The first two NICE Centres opened their doors early 2007. These centres were powered with solar energy. Inside the centres, there was a cinema where people could watch TV and a computer room for access to computers and Internet. Since NICE was a business, all these services had to be paid for by the local customers.
The first two years were mostly spent on solving technical issues, ranging from solar systems that produced not nearly the expected amount of electricity to computers that could not stand the heat. After two years, the technical infrastructure became more stable. The challenge now was to demonstrate that a NICE Centre could make profit. Through a mix of staff incentives, new services, flexible pricing and marketing tools, the first profits were generated in the course of 2009.
The first profits were generated in 2009.
Now that the NICE Concept had demonstrated its viability, in the course of 2009 and 2010 5 new NICE Centres were opened. In order to stimulate local entrepreneurship, a franchise- and lease concept was developed, allowing local entrepreneurs to run a NICE Centre as their own business. Towards the end of 2010, there were 7 NICE Centres in Gambia, of which 6 in franchise. The centres were reporting profit and the proceeds from the centres were enough to cover the overhead cost of the country office in Gambia, but not the head office in The Netherlands. NICE did however have a major setback when in the course of 2009 its mother company Econcern went bankrupt as a consequence of the global financial crisis. NICE was taken over by its founding father Energy4All Foundation, with financial support from some Dutch companies.
In 2010, there were 7 NICE Centres in Gambia.
Given the success in The Gambia, NICE International developed an ambitious plan to further scale up the business to 50 NICE Centres in 3 African countries. At this scale hundreds of thousands of African people would benefit and the entire company would become financially sustainable. In 2011 funding was acquired for the implementation of this plan consisting of a grant from the European Union and investment from three large European companies. On October 1, 2011 the project implementation formally started.
From this moment on, things started going the wrong way. The set-up of a subsidiary in Tanzania was hampered by the fact that a qualified and affordable country manager could not be found. The purchase of equipment for setting up new NICE Centres was delayed by the tendering procedures that the EU required NICE to follow in procurement. And the market in Gambia started changing, requiring the development of a next generation NICE Concept with focus on value added and income generating services, rather than access.
At this scale hundreds of thousands of African people would benefit and the entire company would become financially sustainable.
A year into the project, NICE had made little progress in scaling up the business. Since the expansion had to be partially funded by the additional revenues from setting up new NICE Centres, the financial basis for the project was no longer there. Towards the end of 2012 NICE decided to put the expansion project on hold in order to reduce cost. In the first half of 2013 we tried to generate additional revenues from other services, such as solar- and IT-projects in The Gambia and consultancy in Europe. These new services did not generate revenues as quickly as needed. In the meantime the company was running out of money. In July it was decided to terminate the operations of NICE International in The Netherlands. The subsidiary in Tanzania had not become operational and will be liquidated. The subsidiary in The Gambia was sold to local management.
In our next blog posts we will focus on lessons learned in different areas such as the business setup, funding, the market, consumers and technology.
In July it was decided to terminate the operations of NICE International.